Local stocks are seen trading with an upward bias this week, thereby retesting recent record highs, as month-end window-dressing could add to the buying momentum.
Last week, the main-share Philippine Stock Exchange index gained 2.2 percent to close at 6,665.06 as intraday dips, such as last Friday’s, were only seen as a fresh opportunity to get into the market.
“Despite already hovering at overbought levels, we still think that the PSEi has an incentive to go up as the Relative Strength Index (RSI) is at its strongest point. The month-end window dressing could drive local issues higher,” said AB Capital Securities analyst Abbygayle Estrella. RSI is a technical indicator that plots the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. It is a tool to measure the velocity and magnitude of directional price movements.
AB Capital Securities sees the PSEi’s support at 6,580 and resistance at 6,760 or at the upper band of its uptrend. “We recommend investors to be selective on issues that provide greater upsides on their current levels,” Estrella said, adding that her firm was keen on Manila Water, Jollibee and Security Bank.
Banco de Oro Unibank chief strategist Jonathan Ravelas said that despite the minor profit-taking recently, the market would still have some room to retry the recent highs. “However, bear in mind that the market is ripe for a near-term correction. A much larger correction is at play once the 6,400 level has been broken,” Ravelas said.
He said the better-than-expected growth numbers and expectations of better fourth-quarter and full-year 2012 earnings continued to keep the market on the upbeat.
The PSEi last week marked a new intraday high finish at 6,667.41 on Thursday, the 20th record breakout for this year.
“Having crossed above the 6,600 zone, all eyes are set on the PSEi’s ability to trounce its next target, possibly 6,700-6,750. The general theme is still reliant on stimulus measures that will help boost growth, especially with the earnings reporting season in the coming weeks,” said Freya May Natividad, an analyst at 2TradeAsia.com.—Doris C. Dumlao